Benzinga  Feb 20  Comment 
The following are the M&A deals, rumors and chatter circulating on Wall Street for Thursday February 19, 2015: 3M to Acquire Ivera Medical Corp The Deal: 3M (NYSE: MMM) announced Thursday, that it has entered into a definitive agreement to...
TheStreet.com  Feb 19  Comment 
NEW YORK (TheStreet) -- Ball shares are down 2.55% to $75.21 in early market trading on Wednesday after the food and beverage metal packaging supplier agreed to purchase British rival Rexam plc for approximately $6.8 billion after the closing...
Wall Street Journal  Feb 19  Comment 
Ball Corp. is advancing with a $6.7 billion deal to create one of the world’s biggest packaging suppliers after U.K.-based can maker Rexam accepted its sweetened takeover offer.
Financial Times  Feb 18  Comment 
Deal to unite biggest drinks can makers faces antitrust hurdles
TheStreet.com  Feb 18  Comment 
NEW YORK (TheStreet) -- Shares of Ball Corp. are higher by 2.66% to $76.37 in mid-afternoon trading on Wednesday, as the Wall Street Journal is reporting the supplier of metal packaging for the food, beverage, and personal care products...
Wall Street Journal  Feb 18  Comment 
U.S. packaging company Ball Corp. is nearing a deal to buy U.K. rival Rexam PLC, according to people familiar with the matter.
The Hindu Business Line  Feb 12  Comment 
Rexam, a global beverage can manufacturer, has secured land in Sri City, Andhra Pradesh and in Mahindra World City, Jaipur to build two more plants. The company has an existing plant in Mum...
Reuters  Feb 6  Comment 
British drinks can maker Rexam Plc said it is in talks to be bought by U.S. rival Ball Corp for 4.3 billion pounds ($6.6 billion), a deal that would form an industry giant better...


Rexam PLC (OTC: REXMY) is the worlds largest manufacturer of aluminum beverage cans, producing 45% of total beverage cans sold in Europe and 68% of beverage cans sold in South America.[1] Rexam helps customers develop packaging specific to their own products - for example, Rexam helped the founders of the Arizona Beverage Company develop the brightly colored, extra tall cans the company is famous for.[2]

Rexam also produces plastic packaging for the pharmaceuticals, cosmetics, and food products - but aluminum beverage cans remain its core business. Rexam competes with companies like Ball (BLL), Crown Cork & Seal Company (CCK), Silgan Holdings (SLGN), and Amcor (AMCR) in the packaging and container market.[3] Contracts for metal beverage cans rarely change hands, as beverage distributors sign long-term deals with can manufacturers. Manufacturers tend to avoid one another geographically, to prevent price wars that could lower profit margins. Although this creates a steady client portfolio and revenue stream for Rexam, its earnings are influenced by external factors such as consumer preferences for packaged beverages like soft drinks and beer.[4] Rexam's operating income is also affected by changes in the price of raw materials, specifically aluminum prices, and this is a particularly important issue in the European market, where most of Rexam's contracts do not allow the company to pass the cost of raw materials on to its customers.[5]

Business Overview

Rexam sells 68% of its packaging products directly to ten major customers such as Pepsico (PEP), Coca-Cola Company (KO), and Procter & Gamble Company (PG).[6][7]

Business & Financial Metrics[8]

In 2009, REXMY earned an operating income of £446 million on total revenue of £4.87 billion. This represents a 4.3% decrease in operating income and a 5.4% increase in total revenues from 2008, when the company earned £466 million on revenues of £4.62 billion.


Beverage Cans

Rexam's Beverage Cans segment consists of operations in Europe, North America, South America, and Asia.[9] Rexam is the largest manufacturer of beverage cans in Europe and South America. They produce 45% of total beverage cans sold in Europe, 68% of beverage cans sold in South America, and 22% of beverage cans sold in North America.[10] Rexam plans to grow its Beverage Cans segment by increasing its presence in emerging markets such as South America. In addition to this Rexam continues to develop new specialty cans to attract new customers and maintain their current ones.[11] The production of specialty cans helps Rexam draw in new customers and produces higher margins than the production of standard cans.[12] Customers such as Pepsico (PEP), Coca-Cola Company (KO), and Heineken N.V. (HINKY) use Rexam's beverage cans.[13]

Plastic Packaging

Rexam's Plastic Packaging segment produces plastic closures and containers in Europe, North America, South America, and Asia.[14] Rexam makes plastic packaging products for the healthcare, closure, and personal care markets.[15] Rexam's plastic health care packaging operations make drug delivery devices (asthma inhalers, etc) and prescription containers for companies such as Abbott Laboratories (ABT), Pfizer (PFE), and GlaxoSmithKline (GSK).[16] They produce plastic closures like plastic bottle tops for companies like Coca-Cola Company (KO), Campbell Soup Company (CPB), and Pepsico (PEP).[17] Rexam also makes products such as lipstick cases, compacts, and lotion pumps for companies in the personal care industry such as Avon Products (AVP), Colgate-Palmolive Company (CL), and L'oreal (LRLCY).[18]

Key Trends and Forces

Changes in Aluminum Prices Put Rexam's Margins at Risk, Especially in Europe

The price of Aluminum is affected by several factors including demand from other industries (transportation, construction, etc.) and aluminum manufacturing costs. Changes in the price of commodities such as Aluminum on the London Metal Exchange affect Rexam's profitability. In Europe however, only 50% of Rexam's European beverage can contracts let them adjust their prices when input costs change, which compresses Rexam’s margins in this market. In order to combat this, Rexam is renegotiating contracts in Europe to let them pass cost increases on to the customer.[19]

Rexam is Heavily Exposed to a Few Key Customers

Rexam's ten best customers account for 58% of Rexam's sales. The loss of anyone of these customers in the future would have a significantly negative effect on Rexam's revenues. Rexam combats this risk, and tries to build customer loyalty, by customizing its operations to fit each of its clients’ specific needs. One example is Rexam's construction of a new can factory in Ludesch, Austria built to provide cans specifically for Red Bull. Another way for Rexam to retain customers is to stay abreast of technological advances and to continue to adapt its approach despite the apparent stability of its long-term contracts - an example is the firm's implementation of an online ordering system in North America.[20]

Fluctuations in Exchange Rates Affect Rexam's Pound Sterling Revenues

Because nearly all of Rexam's non-British contracts are negotiated in the common currency of that country, changes in the value of world currencies affect Rexam's profitability. If foreign currencies depreciate, Rexam's revenues in Pounds Sterling will decrease. On the other hand, if foreign currencies appreciate, Rexam's revenues in Pounds Sterling will increase. Because Rexam does a lot business with companies based in countries that use the Euro or the U.S. Dollar, they attempt to decrease this risk by negotiating foreign currency exchange contracts that reduce their exposure to change rate fluctuations.[21]

Changes in Consumer Demand for Beverage Items

The majority of Rexam's revenues come from manufacturing aluminum cans for beverage packaging. The demand for Rexam's beverage packaging products depends on the demand for the beer and soft drinks they hold. These shifts can be seasonal as consumers tend to demand more beverages during the hot summer months.[22] The shifts also follow long-term trends. For example, if customers start consuming more wine and less Heineken, Rexam's sales will drop as Heineken N.V. (HINKY) orders less cans to make up for the loss in demand. On the other hand, if consumers start consuming less wine and more Heineken, Rexam's sales will increase as Heineken N.V. (HINKY) orders more cans to meet the increase in demand.[23]

Key Competitors

Rexam competes with other packaging manufacturers and with food and beverage companies that make their own packaging such as Anheuser-Busch Companies (BUD). Rexam's biggest competitors are:

  • Amcor (AMCR): An Australian company that produces PET bottles, steel and aluminum food and beverage cans, containers for household products, and a variety of other packaging products. Amcor is a major competitor to Rexam’s international operations.[24][25]
  • Ball (BLL): A U.S. based company that produces cans and containers for the beverage, household products, and food industries. They also manufacture satellites and other products for the aerospace industry.[26]
  • Crown Cork & Seal Company (CCK): A U.S. based company that manufactures aluminum and steel cans for the soft drink, food, citrus, brewing, household products, and personal care industries. Crown Cork & Seal Company is one of Rexam's main US competitors.[27][28]
  • Silgan Holdings (SLGN): A U.S. based company that manufactures aluminum and steel cans for human and pet food; plastic containers for food, consumer products, and pharmaceuticals; and vacuum closures for food and beverage products. They compete with Ball's Metal Food & Household Products Packaging and Plastic Packaging segments.[29][30]


  1. REXMY 2007 Annual Report: Market and Industry Characteristics, Beverage Cans
  2. REXMY 2007 Annual Report: Great Packaging
  3. Google Finance: Related Companies
  4. REXMY 2007 Annual Report: Relationships and Risks
  5. REXMY 2007 Annual Report: Relationships and Risks
  6. REXMY 2007 Annual Report: Relationships and Risks
  7. REXMY 2007 Annual Report: Our Operations, Plastic Packaging
  8. REXMY 2009 Annual Report pg. 7  
  9. REXMY 2007 Annual Report: Our Operations, Beverage Cans
  10. REXMY 2007 Annual Report: Market and Industry Characteristics, Beverage Cans
  11. REXMY 2007 Annual Report: Our Operations, Beverage Cans
  12. REXMY 2007 Annual Report: Our Operations, Beverage Cans
  13. REXMY 2007 Annual Report: Relationships and Risks
  14. REXMY 2007 Annual Report: Our Operations, Plastic Packaging
  15. REXMY 2007 Annual Report: Our Operations, Plastic Packaging
  16. REXMY 2007 Annual Report: Our Operations, Plastic Packaging
  17. REXMY 2007 Annual Report: Our Operations, Plastic Packaging
  18. REXMY 2007 Annual Report: Our Operations, Plastic Packaging
  19. REXMY 2007 Annual Report: Relationships and Risks
  20. REXMY 2007 Annual Report: Relationships and Risks
  21. REXMY 2007 Annual Report: Notes to Consolidated Financial Statements, Note 24
  22. BLL 2007 10-K, Item 1: Metal Beverage Packaging, Americas, Segment, page 3
  23. REXMY 2007 Annual Report: Notes to Consolidated Financial Statements, Note 24
  24. Google Finance AMCR
  25. AMCR 2006 20-F Item 4B: Business Overview, page 16
  26. BLL 2007 10-K, Item 1: Business, page 1
  27. Google Finance: CCK
  28. CCK 2007 10-K
  29. Google Finance: SLGN
  30. SLGN 2007 10-K Item 1: Business Overview
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